Matter of opinion

Continuity Amidst Change – Winston is Back!

By the time you are reading this, the Rt Hon Winston Peters could be the acting Prime Minister of New Zealand. From the moment the Prime Minister's pregnancy was announced, this prospect has seen reactions ranging from alarm to outright panic. Yet minority party leaders have previously held the Deputy Prime Minister role in coalition governments and acted in the role of Prime Minister from time to time. The difference here simply is that the role involves maternity cover and extends to a period of six weeks.

If anything, reactions have highlighted how little is widely understood about the power of a Prime Minister in New Zealand, likely a consequence of our unwritten constitution that is spread across various enactments, rules, and conventions. It is no wonder the core elements of our democratic framework are difficult to pin down, let alone teach in schools.

What does it actually mean to be the "boss"? In reality, the role of Prime Minister is highly constrained by our constitutional conventions and, in particular, Cabinet, which is governed by the Cabinet Manual. In Winston's case, his acting role has been further limited by a letter of expectation (Letter). The detail of the Letter reveals that his discretions and powers are circumscribed.

As a starting point, New Zealand government is primarily operated by the collective decision-making of Cabinet. The Prime Minister's powers are set out in the Cabinet Manual, the key powers being:

the right to advise the Governor-General to appoint, revoke, dismiss, or accept the resignation of Ministers;

determining portfolio allocations and ministerial rankings, and the title and scope of each portfolio;

chairing the Cabinet, and in doing so, approving the agenda and leading the meetings;

determining the terms of reference and membership of Cabinet committees;

maintaining and coordinating the government's general policy direction; and

having overall ministerial responsibility for national security and intelligence matters.

The Cabinet Manual provides that, as acting Prime Minister, the Deputy Prime Minister may exercise prime ministerial functions and powers, in consultation (where appropriate and practicable) with the Prime Minister. The Prime Minister in this case has taken the unprecedented step of setting out the extent of powers to be exercised in the Letter, no doubt to manage the equally unprecedented narrative of alarm. Of interest is the many powers that have not been devolved to Winston. The powers of acting Prime Minister are limited to:

chairing Cabinet and the Cabinet committees usually chaired by the Prime Minister but not setting the agendas;

engaging with the Department of the Prime Minister and Cabinet (DPMC);

overseeing the government’s policy programme;

answering questions directed at the Prime Minister in the House and responding to media inquiries, Official Information Act requests, and other correspondence; and

attending official engagements.

Winston will not have the power to appoint or dismiss Ministers, determine portfolio allocations and rankings, or have responsibility for national security and intelligence matters. He will chair Cabinet but importantly, will not set the agenda. DPMC will continue to engage with and brief the Prime Minister throughout her leave. The power to oversee the government policy programme sounds wide ranging, but is a limited one. Any important policy decisions are approved by Cabinet.

Saying that, as set out in Sir Geoffrey Palmer's books Unbridled Power and Bridled Power, the public regard the Prime Minister as the chief spokesperson of the Government on all important issues. Winston will also be free to speak in relation to all issues, not just those concerning his own portfolios. He will not be restricted in what he says as other Ministers usually are. A further complication is Winston's role as both leader of a minority government party and the coalition government. Adding to this, Winston has a reputation for being outspoken (although he is arguably extremely well understood after over 40 years near the centre of the action).

Overall, Winston's impact, (if any) in the upgraded role will be in the area of public opinion and, ultimately, support for the coalition government. More likely, the important positive story will be the one that gets the most traction, certainly on the international stage – Jacinda being one of very few female world leaders to have a child while in office.

In politics

Of Elephants and Employment Law…

Business confidence is the "elephant in the room" for the current Government as it progresses with the rollout of its industrial relations reform. The Government's success will depend on its willingness to consult and engage with business on the final form of the legislation that it does ultimately pursue.

A significant decline in business confidence in the economy has been notable since the Coalition government took office in October. The latest ANZ Business Outlook for May demonstrated that a net 27% of businesses are pessimistic about the year ahead, with businesses only a net 14% optimistic about their own activities. A separate survey from the Auckland Chamber of Commerce showed that 44% of business surveyed by the Chamber expected the economy to worsen over the rest of 2018. It is still early days as to whether this scepticism is warranted.

This occurs in the context of the Government's plan to pass some of the most significant industrial relations reforms since the early 1990s – the main change being the implementation of 'Fair Pay Agreements' that would enable unions and employers to negotiate agreements that set minimum terms and conditions across industries or occupations.

The Government has recently established the Fair Pay Agreement Working Group (Working Group), which will make recommendations on the design of the system by November 2018. This will include recommendations on the threshold that would initiate Fair Pay Agreement bargaining, the identification and selection of bargaining participants, and the mechanism for how disputes will be resolved if negotiations fail.

The Terms of Reference (TOR) have also noted a number of risks that the Working Group will need to mitigate in any recommendations it may make. These include slower productivity growth if an agreement locks in inefficient or anti-competitive business models or market structures, and the possibility for job losses in industries that are unable to pass on higher labour costs to consumers of those goods and services. The Government has made clear that industrial action, including both strikes and lockouts, will be banned during the negotiations for any fair pay agreement. This would make the negotiations for a fair pay agreement different to that of collective bargaining between a union and an employer, where union members can lawfully strike 40 days after bargaining has been initiated.

The proposed reforms have been met with some scepticism; others have recognised the change as a much-needed response to the erosion of worker rights in previous employment law reform. To ensure balance, the Government has appointed former National Prime Minister, the Rt Hon Jim Bolger, as its chair. This could help placate opposition to the agreement, although Bolger's views are widely regarded to have become more compassionate since his time as Prime Minister - especially after a media interview late last year in which he decried neoliberalism and opined that the 1990's reforms may have gone too far.

Regardless, the Government's ability to pass these and other reforms will continue to depend on a willingness to listen and consult with business. Making further decisions without consultation is likely to erode confidence further.

In the news

Charities Act 2005 to be reviewed

The Minister for the Community and Voluntary Sector, Hon Peeni Henare, has announced a review of the Charities Act 2005. The purpose of the review is to ensure that the Charities Act is effective and fit for purpose. The Charities Act regulates more than 27,000 charities in New Zealand and the Minister considers that, given the substantial change the charities sector has undergone since the legislation was enacted, the time has come "to make sure that the Act is still working well".

The review's terms of reference include five substantive matters:

whether any additional purposes of the Charities Act are necessary;

the efficacy of the current regulatory framework, including the suitability of the present offences and penalties regime;

the substance of the current registration and deregistration system;

the obligations of registered charities under the Act; and

the Act's interaction with other relevant legislation.

The terms of reference expressly exclude operational matters from the review's scope. The following matters are also outside the ambit of the review:

the definition of "charitable purpose";

tax exemptions that result from registration under the Act;

regulation of the broader not-for-profit sector; and

contracting arrangements for government services.

The Department of Internal Affairs is the agency responsible for leading the review. It will work closely with a Core Reference Group, the Charities Registration Board, and Charities Services, as well as other government departments and officials, including the Tax Working Group. The make-up of the Core Reference Group is yet to be announced, but it is intended to comprise six people, and to include a variety of perspectives and experiences.

Key stakeholders and members of the public will also be given the opportunity to provide feedback as part of a formal public consultation process scheduled to commence in or around August this year.

Good Farming Practice – launch of Action Plan to improve waterways

In June, the Government launched the Good Farming Practice: Action Plan for Water Quality, a plan to assist farmers and growers in reducing their impact on fresh water. The Action Plan has been developed by a partnership between primary sector organisations, regional councils and the Ministries for the Environment and Primary Industries.

The Action Plan aims to improve the ecological health of New Zealand's waterways in four main ways:

supporting every farmer and grower to develop a Farm Environment Plan to ensure implementation of the principles that are relevant to their farm and catchment;

improving mechanisms for monitoring and reporting on uptake of these practices; and

communicating progress to relevant stakeholders including local communities and regional councils with a look to cultivating public accountability for the agricultural community with respect to water quality.

Minister for the Environment, Hon David Parker, launched the plan with an acknowledgement that some regional councils already require farmers to have an "environment plan" (Canterbury has had a plan in place for a number of years, for example), but said that his hope was that the plan would "accelerate the uptake of good farming practices across all regions".

The proposed timeframe for the identification of priority principles for particular regions and developing monitoring and reporting systems is between 2018 and 2020, while the intention is for all farms and horticultural properties to have assessed their specific risks and developed their Farm Environment Plan by 2030.

A comprehensive copy of the plan can be found here, and the accompanying press release from Minister Parker and Minister for Agriculture, Hon Damien O'Connor, can be found here.

Office of the Ombudsman responsibilities expanded

Justice Minister Hon Andrew Little has announced an extension of the Office of the Ombudsman's responsibilities in respect of monitoring places of detention under the Crimes of Torture Act 1989. These additional responsibilities, gazetted on 6 June, will see the Ombudsman monitoring the treatment of patients in privately run aged care facilities and detainees in court cells.

This represents an increase in the scope of the Ombudsman's responsibilities in this area, which, pursuant to the United Nation's Optional Protocol to the Convention against Torture, currently provide for the examining and monitoring of treatment of persons detained in:

prisons;

immigration detention facilities;

health and disability places of detention;

youth justice residences; and

child care and protection residences.

Chief Ombudsman Peter Boshier stated that the new designation was a "major expansion of our work," particularly in respect of patients in privately run care facilities, as these facilities are "where there are dementia units and where people, often the elderly, are detained because of their vulnerability." In a 2016 report on the Torture Ambassador Project, the Human Rights Commission identified the aged care and disability services sectors as places where people may be vulnerable to being deprived of their liberty, and recommended an increase in the scope of monitoring to encompass these sectors.

Working Group established to review the Holidays Act 2003

The Workplace Relations and Safety Minister, Hon Iain Lees-Galloway, has announced the establishment of a Working Group to carry out a full review of the Holidays Act 2003. The Group will be made up of employer, worker and government representatives and will be chaired by Professor Gordon Anderson of Victoria University of Wellington. The Government commissioned the review following a joint request from unions and employers.

The Holidays Act provides minimum entitlements to annual holidays, public holidays and sick and bereavement leave. However, systemic non-compliance issues have been apparent since 2012. A large number of employers struggle to meet their obligations and a large number of employees are denied their full entitlements. The Minister says New Zealand needs holidays legislation that "provides certainty to both employers and employees so that employees receive their correct entitlements".

The scope of the review is broad. The Working Group is charged with generating fundamentally new ways of providing for entitlements and pay, while retaining the purpose of the current Act and (at least) the current levels of entitlement. The key objective of the Working Group is to develop options that:

make the provision of, and payment for, entitlements to holidays and leave simpler and more readily applicable to the range of working arrangements in the labour market;

provide clarity and certainty to employers and employees so that employees receive their correct entitlements and employers' indirect compliance costs are reduced;

aim to protect the overall entitlements to employees; and

are easy to systematise and implement in payroll systems.

The Working Group is to provide an interim report after six months and a final report to Government in mid-2019. It is tasked with consulting widely, however no public submission process has yet been set down.

Consultation begins on the Zero Carbon Bill

In 2015, New Zealand signed up to and ratified the Paris Agreement, which targets net-zero greenhouse gas emissions by 2050.

On 7 June 2018, Hon James Shaw, Minister for Climate Change, introduced consultation on the Zero Carbon Bill, which is designed to provide a stable policy environment as New Zealand works toward this target. Hon James Shaw describes the Bill as a tool to facilitate a "new industrial revolution", by encouraging investment "away from old, polluting industries and into alternatives".

As part of this consultation, the Interim Climate Change Committee is seeking views on:

whether to define 'target' for net-zero emissions by 2050 by including:

carbon dioxide only (which would not apply to methane or nitrous oxide);

the design of an 'emissions budget' which would set out how much net greenhouse gas can be emitted over a period of time (to provide certainty to emitters);

the role of the Climate Change Commission in advising the Government on emissions budgets and the Emissions Trading Scheme; and

the powers and responsibilities that should be afforded to the Government to develop national adaptation plans, require reporting from participants or undertake regular risk assessments.

As part of the consultation process, the Ministry for the Environment intends to hold public meetings throughout New Zealand. Consultation closes on 19 July 2018. The Government will consider submissions and aims to introduce a Zero Carbon Bill by October 2018. The Bill is expected to go to Select Committee between October and March 2019, and come into force in April 2019.

Further information on the Bill, including the process for making submissions (which are due by 19 July), can be found here.

Release of the draft New Zealand International Education Strategy

Minister of Education Hon Chris Hipkins has released a draft of the International Education Strategy 2018-2030 (NZIES). The NZIES aims to "create an environment where international education can provide economic, social and cultural benefits for all New Zealand." The NZIES replaces the 2011 Leadership Statement for International Education and is organised under three key goals:

delivering an excellent education and student experience;

achieving sustainable growth; and

developing global citizens.

The Minister of Education is currently seeking feedback to help shape the final NZIES.There are multiple avenues to provide feedback on the NZIES, including the online survey (available here) and by attending the ENZ Connect Series. Consultation on the draft NZIES closes on 22 June 2018. A stakeholder reference group of both education providers and students will also be consulted.

The ENZ Connect series is open to all international education professionals and will provide the opportunity to share industry insights and experiences. It will be hosted by Education New Zealand Chief Executive Grant McPherson and General Manager Industry Development Greg Scott and involve seven workshops in six New Zealand cities throughout June. More information can be found here.

Simultaneously, the Ministry of Business, Innovation and Employment is consulting on the Government’s proposals for changes to post-study work rights for international students and the eligibility of student’s partners and their dependent children to work and study in New Zealand. Submissions are open until 29 June 2018. More information on these related proposals can be found here.

Three strikes law reform obstructed

Justice Minister Hon Andrew Little has announced that a proposal to repeal the Three Strikes law would not go before Cabinet after New Zealand First said it would not support the move.

The law dubbed "Three Strikes" was originally an Act Party policy that was adopted by the National-led Government in 2010, introduced through the Sentencing and Parole Reform Act, and implemented a three-stage system of escalating penalties for certain repeat offenders. The rationale for the regime was that it would target the "worst of the worst", deter violent offenders from offending again, and ultimately improve public confidence in the criminal justice system.

In his press release on 11 June, Minister Little acknowledged New Zealand First's position and said that the strength of the coalition meant that change only occurred with the support of all three parties. The Minister noted that a "balanced" reform package would be announced in the future after consideration from an independent advisory panel and coalition negotiation.

Since its introduction, Three Strikes has been heavily criticised, with Minister Little saying last year that the law had not reduced crime rates and failed to act as an effective deterrent. Unsurprisingly, then, Three Strikes found its way onto the Government's agenda for criminal justice reform. Broadly speaking, the Government's package of criminal justice reforms marks a rejection of "Law and Order"-style politics, and aims to amend sentencing law, cut the ballooning prison population, and consider alternative strategies to reduce rates of reoffending.

Amended forestry regulations in the Emissions Trading Scheme

On 8 June, Forestry Minister Hon Shane Jones and Climate Change Minister Hon James Shaw released a consultation paper on improvements to forestry regulations in the New Zealand Emissions Trading Scheme (NZETS). The paper follows the Government's announcement of its goal to plant one billion trees over the next 10 years in February 2018.

The consultation paper proposes 12 changes to the existing regulations, on the basis of feedback received in the 2016 review of the regulations, as well as the mandatory emissions returns from the 2,300 forestry participants in the NZETS. The 12 changes, split into three "significant proposals" and nine "technical proposals", collectively aim to:

address gaps and weaknesses in the current carbon accounting methodology and correct other technical issues;

simplify the operation of the forestry components of the NZETS; and

reduce fiscal and reputational risk to the Crown arising from incorrect reporting of carbon stock.

Minister Shaw noted that he and Minister Jones are "…hoping to make some straight-forward, practical changes soon to improve the ETS for people who plant trees..."

The full consultation paper is available here. Submissions on the paper are due on or before 3 July 2018 and can be sent to [email protected] or posted to the address listed here.

The Ministers will consider final proposals arising from the consultation process later in 2018, and any new or amended regulations would come into force in early 2019. The Ministers have also noted that these changes are independent of other policy changes that may occur following the NZETS review, which will be consulted on later in 2018.

Progress of legislation

New Bills

Appropriation (2017/18 Supplementary Estimates) Bill
Type of Bill: Government
Member in charge: Hon Grant Robertson
This Bill seeks parliamentary authorisation of the individual appropriations and changes contained in the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2018. The individual appropriations and capital injections are set out in Schedule 1, 2, and 3 of the Bill.

Appropriation (2018/19 Estimates) Bill
Type of Bill: Government
Member in charge: Hon Grant Robertson
This Bill seeks parliamentary authorisation of the individual appropriations contained in The Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2019. The individual appropriations, expenses, and capital injections are contained in Schedules 1 – 4 of the Bill.

Broadcasting (Games of National Significance) Amendment Bill
Type of Bill: Member's
Member in Charge: Mark Patterson
This Bill would amend the Broadcasting Act 1989 to ensure that specified sporting events of national significance are broadcast live and free-to-air in New Zealand. The events specified include the Olympic Games, Rugby World Cup matches involving New Zealand, Netball World Cup matches involving New Zealand, and Cricket World Cup matches involving New Zealand, among others.

Farm Debt Mediation Bill
Type of bill: Member's
Member in Charge: Darroch Ball
This Bill would introduce mandatory mediation prior to the appointment of a receiver in respect of an agricultural debt. An agricultural debt is defined in the Bill as "lending to farmer(s) by registered banks and non-bank lending institutions as defined by the Reserve Bank of New Zealand". The Banking Ombudsman would be required to create arrangements for the accreditation of persons as mediators. Mediation sessions would be confidential and parties would be entitled to be represented by an agent. At the end of a mediation, the mediator would be required to lodge a Summary of Mediation with the Banking Ombudsman.

Local Government Regulatory Systems Amendment Bill
Type of Bill: Government
Member in Charge: Nanaia Mahuta
This Bill is an omnibus bill. The Bill would amend the Local Government Act 2002 in respect of local government operations by reducing filing requirements and improving document accessibility, including digitally releasing public notices and plans. Further, the Bill would amend the Local Electoral Act 2001 to empower councils to improve representation and participation in local government elections. The Bill would also amend the Local Government Official Information and Meetings Act 1987, the Local Government Act 1974, and the Local Government (Rating) Act 2002 to update and clarify public and interested party notification requirements. Provisions of the Dog Control Act 1996 relating to disability assist dogs would also be amended under the Bill, as would provisions of the Rates Rebate Act 1973 relating to the eligibility of retirement village residents to rates rebates.

Protection for First Responders and Prison Officers Bill
Type of Bill: Member's
Member in Charge: Darroch Ball
This Bill would create a new offence in the Crimes Act 1961 of injuring a first responder or prison officer with intent. The offence would carry a minimum sentence of 6 months' imprisonment. First responders would include staff from the police, and emergency health and fire services. The Bill would also amend the offence of assault on Police, prison, or traffic officers in the Summary Offences Act 1981 to include first responders in the category of workers to which this offence applies.

Acts awaiting assent

Education (Tertiary Education and Other Matters) Amendment Bill
Private International Law (Choice of Law in Tort) Bill

Acts assented

Brokering (Weapons and Related Items) Controls Act 2018
This Act establishes a regime to regulate the brokering of weapons and related items by New Zealanders and New Zealand entities. The Bill defines a "brokering activity" in section 6 as 'arranging, facilitating, or negotiating' the international movement of weapons and military equipment from one foreign country to another foreign country. It does not include the import, export, or internal movement of arms and military equipment within New Zealand, which are already regulated by the Arms Act 1983, and the Customs and Excise Act 1996, and does not include ancillary services relating to brokering.

The Act requires all New Zealanders and New Zealand entities wishing to engage in brokering to register with the Secretary of Foreign Affairs and Trade and to obtain a permit for each brokering activity. The regime also applies to New Zealanders and New Zealand entities operating abroad. The Bill creates offences for conduct that contravenes its requirements, including engaging in brokering without being registered as a broker and having a permit, breaching the conditions of the registration or permit, failing to keep or produce records or to answer questions, and providing false or misleading information in connection with a registration or permit.

Families Commission Act Repeal Act 2018
This Act repeals the Families Commission Act 2003 and disestablishes the Families Commission. The majority of the Commission’s functions have already been transferred, through non-legislative measures, to the Ministry of Justice, the Ministry of Social Development, and the Social Investment Agency. The Act transfers the Commission’s residual assets, liabilities, agreements, leases, licence arrangements, and information to the Ministry of Social Development. The Act does not apply to individual employment agreements or appointments and all employment and appointment positions with the Commission have been dissolved.

In the week ahead

What’s coming up in the House

This week, the House will complete the remaining stages of:

the Land Transport Management (Regional Fuel Tax) Amendment Bill;

the Taxation (Neutralising Base Erosion and Profit Shifting) Bill; and

Proposed changes to the Misuse of Drugs (Industrial Hemp) Regulations 2006 and regulations under the Food Act 2014.

20 June

Ministry of Business, Innovation and Employment

Proposed changes to NZBN Primary Business Data.

20 June

Discussion paper for a new regime for unravelling Ponzi schemes.

6 July

Standards New Zealand

Draft revision to NZS 6114:2006 A2 electrical installations and the requirements for the safe supply of electricity to installations, facilities and equipment operating at non-standard voltages and frequencies.